The Center undertakes research directed at identifying and evaluating innovative financing and organizational approaches to the care of individuals with severe mental illnesses (SMI). Priority is given to those options expected to have substantial impact on functional status and quality of life for the SMI, as well as those expected to improve efficiency of the care system. Core funding is directed toward pilot and developmental studies that are expected to lead to major research and demonstration initiatives for which new sources of funding are sought. Research objectives of the Center are directed at three policy relevant areas: (a) Assess the costs and effectiveness of alternative treatment approaches for the SMI which are based on treatment models with established efficacy or accepted practice, and develop, refine, and test appropriateness criteria for matching SMI patient needs and services. (b) Examine the role of financing mechanisms as a means to encourage efficiency, assure access to appropriate care for the SMI, and provide incentives for enhancing patient outcome status, including dimensions of mental status, physical status, adequacy of living arrangements, and quality of life. (c) Examine alternative organizational and system approaches for managing resources and coordinating services to the SMI and evaluate their impact on utilization, costs, and outcomes of care; services include mental health, rehabilitation, housing, general medical care, and resources include income support and payment for treatment and related services. The Center has pursued these objectives successfully since 1987. During the next five years, priority for core funding is being given to policy issues in the organization and financing of state and local mental health authorities, to improvement in classification and measurement methods, and to increased attention on special populations within the SMI. The Center represents a collaborative effort of several departments in the School of Hygiene and Public Health and School of Medicine of the Johns Hopkins University and the Center for Mental Health Services Research of the Department of Psychiatry of the University of Maryland.